Hips are History as Investors Flood the Market
The UK coalition government has made an immediate impact on the UK property market with measures that will quickly weaken UK property prices.
HIPS – Home Information Packs have been suspended with immediate effect – and will, in the words of one estate agent, lead to an increase in properties put up for sale on a speculative basis.
Equally, the threat of capital gains taxes on profits of up to 40 or even 50% has led long term investors to seek a quick sale.
Don’t forget the central London market has been is largely driven by foreign money for the past few years – Russia or Middle East Oil Money plus Euro investors – and now, those same investors need to sell quickly as they too will face 40 to 50% tax on any UK property gains.
Of course, those same non-UK investors will seek to place their investments in alternative, low tax, locations. And, to this, can be added the UK based investors also heading for the exit before the new rules take effect.
Agents are already reporting a sharp increase in instructions and we can expect the supply of property to rapidly outstrip demand – even in property’s traditionally best selling season – the spring.
And, at some point, the over supply on the market could reach a tipping point which sends UK property prices downwards sharply.
All eyes on the RICS supply figures to be released shortly. We could be in for a far sharper decline in UK property prices than seemed possible only a week ago.